Quite often, borrowers want to hold title differently than the way they applied for their mortgage. Here,I’ll. answers questions regarding how title vesting and mortgage responsibility can be separated, to gain the flexibility needed for different purposes.
My wife and I are buying a home. I don’t mind being on the Note and Mortgage, because we need my income to qualify. But because my job leaves me with liability exposure, I do not want to be on the Title to the house. Can we work this out? The answer is a qualified “yes”, but it will have to be done a bit creatively in the current lending environment. Although S.C. real estate law allows for exactly this situation, there are many states that enacted anti-foreclosure laws that this arrangement interferes with. So almost every conventional and government lender will default to the other states’ laws, and require that anyone on the Note also be on Title. However, after you close on the purchase, you can file a simple Quitclaim Deed transferring your share of the title to her. Your real estate attorney can execute this for you at a cost of a few hundred dollars.
Can I hold or transfer my primary residence into a trust for estate or tax purposes? Both Fannie Mae and Freddie Mac allow homes to be held in certain types of trusts. The types of trusts allowed are: Inter Vivos Revocable Trusts, Revocable Trusts, Living Trusts or Revocable Living Trusts. A/B Trusts, which are usually structured for estate purposes, fit this category and are allowable.
Which Trusts are not allowed? Any Non-Revocable Trust, defined as an arrangement in which the grantor departs with ownership and control of property, and requires a Beneficiary to dissolve the trust, are not allowable.
Can I purchase an investment property and hold the property in an LLC or corporation for liability purposes? Fannie Mae and Freddie Mac do not allow for their loans to be closed in the name of an LLC or corporation. To get around this, many investors close initially with their names on the title and mortgage, then transfer the title into an LLC for liability protection. There are differing legal opinions as to whether the deed transfer triggers a “Due on Sale” clause which could void the mortgage, but in practice I have never seen this happen.
Copyright: Preferred Financial Services, Greenville, SC / NMLS #192279 / email: mark@thegreatestrates.com / phone: (864) 235-9596|Disclaimer|Terms & Conditions
